Kemp Halts $100 Million in HUD Work : Funding Suspended After Probe Finds Appointees Benefited
Housing Secretary Jack Kemp announced today that he is halting more than $100 million in low-income housing renovation projects after an investigation found former top HUD appointees in the Ronald Reagan Administration won lucrative contracts through a system rife with favoritism.
A report by the Housing and Urban Development Department inspector general said HUD agreed to pay $59 million in excess housing assistance over the life of 15-year contracts that the inspector general examined. The report said if the pattern exists throughout the program, the excess could approach $413 million.
Kemp said he was halting all fiscal 1989 funding for programs in which contracts had not yet been agreed upon and ordering an audit of existing contracts.
35 Projects Affected
His actions stopped funding for 35 projects valued at more than $100 million while they are reconsidered, Kemp’s assistant, Mary Brunette, said today. Eight other projects for which contracts were already in place will be allowed to continue, subject to audit, she said.
The report centered on a rehabilitation program that provides $225 million a year for housing in which developers acquire and renovate existing projects. By winning the contracts with HUD, developers are able to receive low-interest commercial loans backed with HUD’s guarantee of federally subsidized tenants.
The report by HUD Inspector General Paul Adams said former HUD officials and employees actively participated, often as developers or consultants, in the projects.
Top-Ranking Officials Named
It named top-ranking HUD officials during the Reagan Administration, including former Undersecretary Philip Abrams and former Assistant Secretary for Housing Philip Winn, who later became owner-developers in half a dozen rehabilitation projects.
Winn is now the ambassador to Switzerland. Both he and Abrams are from Colorado. Efforts to reach them by telephone were not immediately successful.
The report named several other former HUD officials who earned money as consultants on the projects after leaving government. Among them was Joseph Strauss, a former special assistant to then-HUD Secretary Samuel Pierce. The report said Strauss collected $1.3 million in consultant fees on such projects.
Pierce’s one-time executive assistant, Lance Wilson, was also identified as an owner-developer in six projects.
Adams said today he found no evidence of criminal activity, but that the report was turned over to the Justice Department’s public integrity section for review.
